New Market

Theres a brand new day on the horizon

Everythings gonna be just fine

Theres a brand new day on the horizon

And the whole worlds gonna be mine

Im gonna tell old trouble,

hed better be moving on

Happiness is going to take his place

around here from now on

The old dark clouds are gonna roll away

The sun is gonna shine

And the whole worlds gonna be mine

Im gonna tell old heartaches,

pack his bags and go

Ive decided that I dont want him

hanging around no more

Dont you know I said everythings

gonna be just fine

cause the whole worlds gonna be mine

There’s a Brand New Day on the Horizon — Elvis Presley

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What a wonderful, upbeat song. A new day is dawning; a new market is coming; life is grand… Ahhh, isn’t denial a wonderful thing?

Today’s featured property would like to see a new market because the current market is taking all their equity. These are the listings that really grab me because these people are actually losing their own money rather than the lender’s. Every penny of the first $200,000 lost on this property comes out of their pocket.

2 New Market Outside 2 New Market Kitchen

Asking Price: $550,000IrvineRenter

Income Requirement: $137,500

Downpayment Needed: $110,000

Monthly Equity Burn: $4,583

Purchase Price: $580,000

Purchase Date: 10/7/2004

Address: 2 New Market, Irvine, CA 92602Rollback

Beds: 3
Baths: 3
Sq. Ft.: 1,500
$/Sq. Ft.: $367
Lot Size:
Type: Condominium
Style: Contemporary
Year Built: 2001
Stories: Two Levels
View(s): Mountain, Park or Green Belt
Area: West Irvine
County: Orange
MLS#: P618074
Status: Active
On Redfin: 38 days

Turkey Turnkey home!!! Highly desirable townhome by builder William Lyon. This is Andover’s largest model, and shares only one wall as an end-unit! Immaculate 3bed/2.5bath/1500sqft. with a loft. Upgraded carpets, hardwood floors, appliances, central heat and A/C. Prewired with Cat-5 throughout the home and loft for a functional home office. Custom drapes, in-ceiling surround sound, and epoxy flooring in garage. Master bedroom has walk-in closet, and custom privacy door. Professionally landscaped patio. Steps to Pool-Spa-Tennis amenities. .. and of course the unparalleled West Irvine Schools: Myford Elementary, Pioneer Middle School, and Beckman High! A very SMART choice. Act now.

It only shares one wall? Now the degree of attachment is becoming a selling point?

unparalleled West Irvine Schools? You mean the ones in Tustin’s school district? Perhaps a bit misleading? Perhaps intentional?

.

.

If this seller gets their asking price, they will lose $63,000 after a 6% commission. It will be all their equity that is lost.

Think back to October 2004 when the rally was seeing some of its steepest price increases. Did anyone who bought then think there was even the slightest chance of losing money on the deal?

I don’t care what the median shows, when you look at individual properties reselling in the market (like Case-Shiller does) we are clearly passing through 2004 prices. The bubble built on the bubble created by negative amortization loans and the complete breakdown of lending standards has been deflated. Now we are approaching the bubbly prices of 2004 when our 90s-type bubble would have popped. If the 90s are any guide, we are due for another 20%-25% decline from here over the next 5-7 years. Although, with the tsunami of foreclosures about to hit the market, I would not be surprised to see a 30%-35% further decline in 2-4 years. I really is different this time: it is much worse…

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134 thoughts on “New Market

  1. SD Scientist

    As a matter of fact, Myford Elementary is the 13th best elementary school in Orange County, out of 400 or so (by 2005-06 API scores). Pioneer Middle is 3rd best out of 80.
    —–

  2. NanoWest

    The long slow process of selling a property in a slow market is very, very painful. Every week that goes by brings a new level of worry and concern, especially if ownership is emptying you bank account.

    The hardest part is that every time you make a price reduction, you realize that you are losing out and that you are trapped.

  3. AZDavidPhx

    2500.00 a month rent on a condo!

    That’s a full paycheck (or more) for many of you!

    WOW!

    Are the majority of people there fully dependent on a 2 income household?

    Doesn’t buyers remorse sting you every month when you see all that hard-earned cash go PFFF from your bank account?

    Must be a hell of a mountain view!

  4. ipoplaya

    That is a little high IR. Average 2007 lease rate for those units, as reported by MLS, was $2387.

    George – Andover (New Market’s tract) is very dense, which helps block out what noise there might be from the 261. There really isn’t much of a noise issue from the toll road.

  5. ipoplaya

    This property should get into escrow very soon. They’ve had a bunch of offers already, a few in the ballpark, just not brought one across the finish line yet.

    A great number of people would pay $500K today to acquire this condo.

  6. ipoplaya

    Yeah SD, the TUSD schools that serve West Irvine are rock solid. Myford is a Cal Distinguished school with a 932 API. Pioneer is a fantastic junior high that tests out better than almost every IUSD intermediate school.

    There are people that buy into West Irvine just for the school combination. Heck, my wife teaches in IUSD, and we are looking hard at Tustin Ranch. I wouldn’t mind at all sending my kids to Peters Canyon, Pioneer, and Beckman…

  7. George8

    GRM is 200 assuming selling for $500k or renting for $2500/month.

    For GRM 150, the price needs to drop to $375k. I wonder how likely this might happen in 2010-2011?

  8. irvinerealtor

    At the risk of opening myself to some serious blog-flog, I can answer anything about this home.

    I’m a fan, and appreciate the fodder that helps bring unrealistic sellers to reality.

  9. Priced_Out_IT_Guy

    Why do 50% of pollers feel sorry for homeowners that lose their own equity? For all we know this owner may have rode the 1999-2003 Matterhorn before purchasing this condo in ’04. Too bad they didn’t unbuckle and get off the ride at the apex. Now its time for the decent…

    If you buy a home you can afford and plan to live in as a primary residence the whole concept of losing equity is moot. It doesn’t matter what your house is worth on paper because your house is serving its purpose–to provide you with shelter.

  10. irvinerealtor

    I also manage a couple of rental properties very analagous to this one within 0.5 mile. $2400 seems very reasonable. With this model, occupants have the loft which prevents cannibalizing a bedroom for office use, so you might be able to push a little higher.

  11. CK

    Yes, isn’t it great to see an ignorant swipe taken at the West Irvine TUSD schools right here on the main blog. The schadenfreude here is getting almost unbearable…I need to find somewhere else to spend my morning coffee. There have been some nice trades in the NBA lately, maybe some more time on ESPN.com is in order….

  12. mark

    The real decline in prices is not reflected in the Irvine median. All you have to do to prove a 15%+ decline, is visit a new development. New homes are selling for at least 10%+ less than they were a year ago and there are many incentives that weren’t offered then.

  13. FairEconomist

    At 6% interest I get rental equivalence at $380,000. Not promising for our New Marketeers. Hope they drop their price low enough to sell fast.

  14. ipoplaya

    Too bad Villa Rosa in Woodbury isn’t holding to your premise. List prices there are down less than 10% off peak and I don’t believe they are offering any incentives. If they were down 15+% from last year’s prices, they’d probably be completely sold out…

  15. mark

    Interesting. I haven’t visited Woodbury too much. I’ll refine my statement: Developments like Columbus Villages, Portola Springs, and Central Park West (& Avenue One) have seen double-digit price declines in the past year.

  16. Alan

    IR..

    Maybe your being a little hard on these sellars..

    Sure they are losing $60-80k now. But look at it this way. That money is gone. All you can do now is stop your ongoing losses. If they were to hold this property for another year or two their losses will more than double the $60-80k they lose now. Maybe they are getting out because they just want to stop their losses where they are.

    IMHO, prices will continue to fall at least 10%/year thru 2012 before bottom is hit so getting out in 08, maybe a little late, is still the smart play.

  17. Stupid

    Actually, the old joke used to be that in SoCal there it was a 3 income household – the husband, wife, and the house. But the house isn’t doing so well lately. Maybe it’s getting lazy?

  18. irvinerealtor

    In addition to the seller incentives, builders are working with brokers again at a full 3% referral commission. Builders stipulate that agents must be with buyers at initial walk-through (and that buyer has not previously signed on independently to IrvineCo’s interest list). If you are leaning towards a new home, I’m sure you can work out an agreement with your broker to get an extra bump on top of your already negotiated purchase price.

  19. Everett

    POITG,

    I think folks feel sorry for people losing their own equity because they can visualize themselves in that position as well. Just because someone is losing equity on their house does not mean that they purchased that house with the primary intention of building equity through value growth. It may well mean that they purchased the house because they wanted to be home owners, intended to live there indefinitely (i.e., not to flip), and are now having to sell due to a change in circumstances. It’s hard to say either way, and I would posit that the 50% who feel sorry for those folks (it should be obviously at this point that I’m one of those… 🙂 are assuming the best about the losers’ intentions and feeling sorry for the fact that they got burned by bad luck, not bad decision making.

    Cheers!
    Everett

  20. roundcorners

    The wife and I decided to check out West Irvine this past weekend; we visited 59 & 73 Sapphire and checked out New Market’s open house. We have to be honest; this house sure did pull on our heartstrings; it’s amazing that IR focusing on this house today. The location is SUPER quiet, you can’t hear the Toll Road or Jamboree; it’s at the end of a sidewalk where it is very private, except for the neighbor in front of you. Very nice patio and the size, sq/ft, floor plan was perfect. The realtor, Scott, mentioned that he had 6 offers in already. So I would guess it would enter into escrow soon; I’m confident that someone would snatch up this property real soon. The “story” is that the couple has relocated to another state, and needs to sell for $520K in order to purchase new property. New Market has been playing with my mind all weekend; and it’ll be really interesting to see what it sells for. The wife and I were even discussing possibly even getting financing ready and putting in an offer; but thank goodness we got busy and it’s been a few days. There is another exact property on the market, but I’m guessing not as quiet. We are glad to have discover a new floor plan to keep track; and are still patiently WAITING!!! Thanks IR for bringing use back to reality!!!

  21. buster

    I think the point is that the listing is misleading. Generally, Irvine schools are better than Tustin. But on a case-by-case basis that may not be true.

    But then, the school itself (or the district for that matter) has been statistically PROVEN to be a poor indicator of adademic success. Read Freakonomics (yes, written by award winning economists) as to why. So, if the school and the district don’t even matter, is it just Realtard hype to even mention it?

  22. Purplehaze

    All IR said was that there was a misrepresentation on the part of the listing agent as to characterize the schools as West Irvine schools when these in fact fall in TUSD. He never indicated that the schools are inferior. I agree with IR, that the agent has misrepresented the school information in his listing.

    I think we should be grateful to IR and indicate our gratitude through respecting the person’s point of view.

  23. Mike in Irvine

    Is there any hope for Northwood and Westpark homes to list below 2004 prices. Currently all i see is 2005 or 2007 prices.

  24. buster

    I actually like the place. It looks nice, appears to have a decent layout and been kept up well (or very nicely staged). But over half a million for a 3/3 condo? In Irvine? Maybe in Manhattan or Paris or London. But Irvine? Mmmm……..I think not.

  25. AZDavidPhx

    Too funny.

    Now I understand the previous references I have seen people post in regard to the house not pulling its weight.

  26. AZDavidPhx

    Probably having a hard time getting to the finish line because no bank wants to hold the bag on a 500K 1500 square foot condo.

    That’s a tough sell when the buyer has to use their own money!

  27. George8

    As the great housing bubble deflates, $500k will afford you much better property two year down the load.

    Dead cat bounce is what is going on. Please look at NASDAQ chart during the months of July-Sep. 2000. That is where we are at. The falling off cliff sensation is still a few months away. And the bottom is still 2 years away.

    Patience is a great virtue.

  28. irvinerealtor

    Thanks for stopping by this weekend.

    I do have another identical model with an interested seller, that is not currently on the market if you are interested.

    You are right that 27 Crestline is identical, but priced another $30K higher and in a poor corner location.

    A bit of free advice for you also (worth every penny):

    59 Sapphire is a TERRIBLE location with headlights from the toll road running through your master bedroom windows all night long. Run away!

    73 Sapphire was bought at an auction and is a rare “flip” in this market… new travertine and carpets and still priced pretty attractively. If you don’t mind the downstairs living space, it is a nice option.

  29. Thomas

    I had the same thought. I lived in West L.A. for six years, during the middle of this bubble, and passed up on some comparable condo opportunities in the bubbly $400 mil range. This was in ’02, but I couldn’t get past the fact that these were CONDOS. Perhaps I could have flipped it, especially being West L.A. and all. But IRVINE? It’s like the Sesame Street game of “one of these things is not like the other”:

    West Los Angeles
    Manhattan
    Paris
    London
    Irvine

    Choose wisely!

  30. CK

    Uh, Purplehaze — The village of West Irvine IS in the TUSD, despite the fact that it is the city of Irvine. Everyone who lives here knows that West Irvine and Northpark fall in the Tustin school district, despite the fact they are in the city of Irvine. The realtor even named all the schools — hardly trying to misrepresent what schools this home attends, more like promoting those schools.

    And I’m sorry, IR’s comment “You mean the one’s that fall in the Tustin school district” is a snarky dig at TUSD — implying that part of Irvine serviced by these schools is somehow inferior.

    “I think we should be grateful to IR and indicate our gratitude through respecting the person’s point of view”

    Holy sheeple!! Sorry, dude — I showed my gratitude with the donate button. If I see something I think is a wrongheaded misrepresentation, I’ll call it, regardless of who said it.

  31. CrashHappy

    The survey is interesting!

    about half number of people feel sad for those who lost money on real estate and the other half doesn’t.

    wonder if it’s because about half number of people own homes and therefore more sympathetic, and even wishing housing would go up again.

    This also explains why these bail out plans have some strength. Imagine if 90% of people in this country are against it, there is no way these politicians would dare to bail out.

  32. AZDavidPhx

    You have to wait for more of the fence sitters to fall under the knives.

    These prices cannot be sustained on a wide scale without creative financing.

    There are plenty of people who bought homes prior to 2002 who believe the bottom will not catch them and see no risk in “moving up” in the current market. They can sell their current homes for well under market to other victims and still come up with a nice juicy downpayment on their new albatross.

    It doesn’t matter. The pool of knife catchers will dry up eventually.

    The underlying principle is that the first time buyer is still priced out of the game which is slowly going to create more downward gravity on your prices as the body count of knife catchers piles up.

    In the meantime, enjoy the schadenfreude of watching the gamblers call the bottom and fall off the fence.

  33. tenmagnet

    Welcome!
    It looks like 73 Sapphire was picked up in 12/07 at $407K, is that right? If so, that’s 150K less than 2 New Market, like for like that’s not a bad deal.

  34. AZDavidPhx

    Exactly right. I’m assuming that these buyers are fully aware that they are spending 500K on an apartment and are fully content with paying back every penny in interest.

    Today it is worth less than what you paid? Oh well. Good thing that the only reason you bought it was because you wanted to live in it and one day have it paid off.

    But then again, if you only bought it because you felt you could make a monthly payment for a couple years and then transfer the outrageous debt (that you never intended to pay off) to the next victim then that is pretty shameful and you deserve to eat humble pie.

    No violins playing over here.

  35. Trooper

    You mentioned that it’s super quiet there and that you can’t hear the toll road or Jamboree….but you were there on a weekend.

    Make sure to make a peak rush hour visit…get out and listen. Might be another story. 😉

  36. irvinerealtor

    Yes, $407K in cash at the auction. Classic risk-vs-reward since they pick it up with no warranties and no recourse if anything is amiss. If you’ve got cash, there are some good places to wait for on the county courthouse steps, on the trustee’s sale auction block.

  37. Priced_Out_IT_Guy

    I guess one’s point of view depends what school you went to: the School of Hard Knocks or the School of Kindness.

    I hope someday I can be as compassionate as you are.

  38. Priced_Out_IT_Guy

    Notice how all the buyers say the bottom is 2 years away and all of the sellers say the market will rebound in 2 years.

    Who is right? Perhaps both are wrong…

  39. Alan

    From the economic projections I’ve been reading, the bottom wouldn’t happen until 2012, or 4 years off instead of 2 years. Prices are projected to remain flat for many years after that and not recover until the mid 2020’s.

  40. irvinerealtor

    Don’t buy anything without seeing it during morning and evening commute hours, and late-night, as well.

  41. Priced_Out_IT_Guy

    Exactly, until I can buy (a first time home buyer) the market will keep dropping.

    I think I’ll start a new business and call it “Priced Out IT Guy for the Queer Eye” to tell inquirers when the bottom has been reached.

    The fee will be $5 per question. The only question you can ask is “Have we reached the bottom yet.” The only answer you will receive is “YES” or “NO”.

    There is no limit as to how many times you can ask this question.

    PayPal and cash only. No personal checks accepted.

  42. tenmagnet

    I’ve noticed your ad on Ipop’s site, most of your listings are in West Irvine. Unfortunately, I’m looking to buy in Northpark. Specifically, I’m interested in 1 Buellton, any idea where that one gets taken down at?

  43. AZDavidPhx

    Buying a house is serious business.

    When I bought my previous townhouse in 2003, I was earning less than 50K per year and had 5000.00 to put down. The lender was qualifying me for loans greater than 300K.

    It was ridiculous!

    I said “300K! WOW! That’s a lot of money! I can’t afford to spend 300K!”.

    Instead; I spent 80K! It wasn’t in a snobby area of town, but it wasn’t in the middle of the ghetto either and I was close enough to work that I could walk!

    That’s why I don’t buy into the bad luck argument. I borrowed what I could afford to borrow and didn’t rely on creative financing to game the system.

    If everyone else would have taken the same attitude then prices would not have ballooned in the tragedy of the commons that ensued; people engaging in bidding wars and driving up prices on houses using money that THEY DO NOT HAVE! Outrageous!

    You have to look out for yourself and live within your own means without worrying about what everyone else is doing. Just because the bank is willing to “qualify” you for some dumbass amount of money and the herd lemmings around you are willing to actually take the lender up on their qualification offer to “buy” an apartment does not mean that YOU should necessarily join the herd and use the “everyone else is doing it’ justification and become part of the problem.

    Bad luck is buying a house the day before an earthquake demolishes it. Being a dumbass and overspending on a tulip bulb does not count.

  44. AZDavidPhx

    Ah-ha!

    “Competition”!

    I think that sums up your housing market perfectly!

    Sort of like bidding for that tulip bulb on ebay when that jerk comes in and tries to outbid you in the final moments of the auction. Screw that! I’ll pay double what he offered! NO! NO! TRIPLE! I know it isn’t worth that much but I am too caught up in the moment! Call my lender!

    The Jone’s are offering 600K for that condo! F THEM! They will never match my borrowing power! I’ll offer 650K!

  45. Chris_Silicon_Valley

    Hey IR, can you check on these 2 properties? They’re listed as “Taking Backup Offers” which presumably means that they’re both in escrow at this point:

    MLS # S511396 (no address)
    65 Ardmore

    I think both of them are bullsh*tting in terms of being in escrow. Is this the new tactic adopted by these desperate RE agents?

  46. AZDavidPhx

    Yes, and if you don’t mind 5 more years of continued depreciation it’s quite an attractive buy!

  47. AZDavidPhx

    Yup. It’s either that or all the first time buyers of today spend the next 20 years saving up the down payment for a 1500 square foot apartment….which seems pretty unrealistic.

  48. Chris_Silicon_Valley

    6 offers my foot. I can say I’ve got 10 offers too if I were him.

    I’d like to sell you a horse whip if I may.

  49. Alan

    Is it bad luck when you buy in wooded canyon that catches fire in 105 degree heat and santa ana wind-conditions and burns your house down?

    How about New Orleans.. Is it bad luck when you buy a house below sea level in a flood zone, don’t buy flood insurance and get 8 feet of water when the levy breaks?

    There are measures you can take to secure your house for earthquakes also, you don’t have to be demolished.

    Luck is a matter of perspective.

    Like when I lived in the midwest.. they had a saying.. there’s no such thing as bad wheather, just bad preparation.

  50. IrvineRenter

    I would note your description is better than most I come across; although, you did slip in the three exclamation points…

    I am curious if any realtors have cleaned up their sloppy writing due to the abuse I give them? Also, do realtors live in fear I will profile their property even though it is free press?

    As for the property, is the little courtyard in the first photo the front of the unit? Does it have street frontage, or do guest park a distance away and walk up a sidewalk to the front door?

    The property itself presents very well. Did you have it professionally staged and photographed?

  51. Mike in Irvine

    I appreciate your replies. I am a first time buyer, under a lot of pressure from friends, family, realtor etc to buy now because prices are falling. I do not plan to be a knife catcher. Just looking for an ‘affordable place’ to stay.

    I have been visiting open houses for the last couple of weeks and it is strange to see that bad unkept houses are being sold at 2-3% below list price.

    There is a house on fort sumter that one has to visit to see the condition (if you do, remember to open the kitchen and bathroon cabinets). i was told that the owner is in europe the house has 6-7 offers varing from 5-10% list price but he will not budge. As a first time buyer I would never bid on the house but i was amazed that there are 6 people waiting with offers on that house. There is another in wood bridge at silkleaf which has a fresh coat of paint and nothing else (too much designed to sell). There is another wierd one on woodbridge with 5 bdrms and 5 baths that one should visit just to see how not to renovate a house.

  52. Chuck

    Yeah, agents like to use this tactic to get you to move quickly. About a month ago we dropped by an open house for a place that has been on the market for almost a YEAR. The agent said right to my face that he expected at least 2 offers to come in by the end of the weekend at prices very close to the asking price. Then I noticed on the Tuesday morning after the weekend they dropped the price again (by a whopping $20,000). A month has passed and it is still on the market.

  53. ipoplaya

    That’s right CK. You TUSD lover! If you buy my condo your daughter can do to those wonderful schools…

    🙂

  54. AZDavidPhx

    Very true. I wasn’t making an argument that you could not prepare for external events.

    My point was more that bad luck is more to do with unforseen events.

    The bubble popping was not an unforseen event; the bubble pop was the big pink elephant sitting on the living room couch from 2003 to 2006. Anyone who bothered to open their eyes could see it.

    When I moved to Phoenix, I didn’t know anything about a housing bubble. I considered buying and had sticker shock when I started looking around. I googled house prices and only a couple hundred thousand blogs came up explaining what was going on.

    Saved me from making a big mistake!

  55. ipoplaya

    Chris,

    http://www.ipoplaya.com

    You think these all got into escrow without offers huh? There is actually a good bit of buying activity going on in Irvine, IMO based on the idea that jumbos are going to be much cheaper. Some people just ain’t smart enough not to buy…

    Every listing is going to get 1-2 uber lowball offers. Fishers that come in 20% or maybe more below list to see if they can pick up somehow pick up something on the super cheap. Places priced properly, i.e. 15-20% less than peak, will get offers. There are so many WTF distressed list prices out there that listings which have embraced this decline get good attention.

    Look at the Irvine inventory graph the is link to the IHB home page. Irvine inventory levels are falling. There are less homes on the market today than there were on January 31st. Why? It’s because things here are selling… Selling for 2004 prices, but selling nonetheless.

  56. AZDavidPhx

    You have to evaluate your own financial situation. Figure out what is affordable to you in the big picture (not just the monthly payment). Keep renting and putting money into your savings account – in a few years you will have a nice chunk of change to put down when affordability returns.

    Don’t assume that everyone else is just a lot wealthier than you are and therefore you need to overspend in order to keep your place on the social food chain.

    If your family and friends are pressuring you to buy then tell them that you are thinking about moving to another state where real-estate is much more affordable. That should pretty much be the end of that.

    The bottom line is that homes provide shelter. The “American Dream” of home owership implies a house that is paid for in full – not a house with a jumbo mortgage.

    It’s going to take some time to re-educate the masses that real-estate is a lousy investment.

  57. Iblis

    This is good advice. Our place is near a soccer field. The floods are so bright at night (even a quarter mile away) that it never truly gets dark at night. But you would never know if you only saw it during the day.

  58. 25w100k+

    hahaha. wow, AZ is giving real estate advice. I know plenty of people who made hundreds of thousands of dollars off real estate. So its a lousy investment how?

    Maybe stocks are a lousy investment too since a lot of people lose money on them. Or bonds. Or commodities. Hrm….

  59. tony

    Everything is a excuse….
    Everyone wants to be like the IUSD.
    Why make do with an Oldsmobile when you want the Cadillac?

    Uni……

    What else can be said?

    At the track and x-country meets, Uni may not be test best, but you can be sure their kids have the highest IQs.

    ;-DDDD

  60. tony

    A house up the street just sold in less than a month… I think they wanted around 900K… they had done a very nice remodel… 2000 sq feet, 4bd, 2ba…. on Saginaw Dr… location was pretty poor though.

    Is there any way to find out what the listing was? It was taken out from Redfin two weeks ago and the “sold” sign just popped up.

  61. tony

    I tried ordering broiled Gila Monster tenderloin and mesquite smoked cactus when I was in Phoenix recently, but all they had were very expensive aged steaks and California Nouveau Cuisine.

    So, I gotta accept the fact that Phoenix has become a suburb of San Bernardino.

    The steaks were excellent, at OC prices.

  62. granite

    Irvinerealtor, your comments are welcome. And even though I rent in Tustin Ranch and my daughter went to Myford/Pioneer/and now Beckman I don’t take offense. There are similar good schools in Irvine.

  63. zornundo

    That sounded like a wise move, AZDavid. The wife and I are taking a similar tack right now. We lucked out in finding a home that had just foreclosed. Bank took possession, relisted, we made an offer, and it’s been accepted. We looked at a wide range of prices, but we lucked out with one that doesn’t exceed our annual gross. We’re in a sparsely populated county in TN, in case you’re wondering.

    Are there homes here going for quite a bit more than we offered on this place? Sure. Could we afford one or those higher priced homes? If we stretched and didn’t mind cutting back on our savings. But we gained at someone else’s expense. In this case, somebody lost their job and could no longer afford their house. Do I feel bad for that family? A little, but the I look at how much they paid and think that they paid waaay too much. My price is a good one-third off of what they paid.

  64. Priced_Out_IT_Guy

    A lawyer friend of mine told me that the giant pink elephant on the living room couch you speak of was not wearing Cal Trans sanctioned visibility devices (yellow blinking lights, a reflective vest, and reflective ankle bands) and therefore it was not apparent to prospective homeowners that prices were entirely unaffordable and outrageous.

    One can justifiably conclude that the blatant lack of responsibility exhibited by the government to provide proper working supplies to the state owned and operated Herd Of Pink Elephant taSkforce of America (HOPES) entitles all citizens who were not aware of the Great Housing Bubble to be bailed out using government tax dollars.

  65. AZDavidPhx

    I sold my place my property at the height of the bubble.

    I didn’t make 100K profit, but it was significant nonetheless.

    Took the cash and joined the renters.

    If all of those people that you know took their 100K profits and immediately re-“invested” them in another property that is now 100K under peak price then the game is over.

    It’s like the people who love to tell you about the time they won 10,000$ in Vegas without telling you that they lost 20,000$ the day prior.

    I’m guessing the 25 year old with his 100K real-estate profit has his bubble profit cash tied up in other real-estate and can’t admit to himself that it was a charade and will soon have to change his blog name to ’25wDiddlySquat’

  66. zornundo

    Some people obviously feel like it’s time to buy. If they choose to buy and actually want to live in the place, why not? The place, at that price, fits their circumstances. But if they have crazy ideas about flipping cuz the price is cratering, then they’re smoking crack.

  67. AZDavidPhx

    Sorry Tony –

    Phoenix had no choice but to steal the idea of flame broiled cow meat from CA. The Gila Monsters could only feed so many of us!

  68. ice weasel

    The sad truth is, for the majority of people who play in the market, be it real estate or (and especially) stock, they lose. It’s a small group of people who make money. Most lose their stake. So, in general, “investing” in real estate or stocks is kind of dumb, for most people. Now, if you have enough cash to diversify and you take the time to actively and intelligently manage it, you might money, big money. But, like Vegas, the come on you hear is, “I know someone who made millions!”. They don’t show you the losers.

    If you say anything less you’re at best not telling the whole story and most likely just dishonest.

  69. shiny

    That’s the spirit 25K: lets berate some knife catchers to make fools of themselves.

    To provide greater clarity to those that are contemplating what will surely be a financially disastrous decision (purchasing in this market), what follows are some of the sagest comments I have seen regarding the ongoing implosion. In a nutshell, they may be summarized as saying the Fed is pushing on a string with their interest rate cuts. Note also the discussion about the great depression:

    What the upcoming recession “will look like” has been the topic of a fierce debate on the Internet. Everyone seems to agree that this is not a typical economic downturn resulting from overproduction, under-consumption or malinvestment. Rather, it is the crashing of humongous equity bubbles that were generated by the Fed’s abusive expansion of credit and the unprecedented proliferation of opaque structured-debt instruments. Many believe that the unwinding of these bubbles will trigger a round of hyperinflation which is already evident in soaring food, energy and health care costs. These prices are bound to increase substantially as the Fed continues to cut rates and further undermine the dollar.

    But the real issue (it seems to me) is the unfathomable loss of market capitalization, the growing insolvency of maxed-out consumers, and the inability of the banks to freely extend credit to responsible loan applicants. These three things are likely to drag down all asset-classes, slow business activity to a crawl, and compel consumers to hoard rather than spend. The dollar will strengthen in a deflationary environment (if that is any consolation?).

    Paul L. Kasriel, Sr. V.P. and Director of Economic Research at The Northern Trust Company answers some typical questions about deflation in a recent interview with economic guru Mike Shedlock (Mish):

    Mish: Would you say that consumer debt in the US as opposed to the lack of consumer debt in Japan increases the deflationary pressures on the US economy?

    Kasriel: Yes, absolutely. The latest figures that I have show that banks’ exposure to the mortgage market is at 62% of their total earnings assets, an all time high. If a prolonged housing bust ensues, banks could be in big trouble.

    Mish: What if Bernanke cuts interest rates to 1 percent?

    Kasriel: In a sustained housing bust that causes banks to take a big hit to their capital it simply will not matter. This is essentially what happened recently in Japan and also in the US during the great depression.

    Mish: Can you elaborate?

    Kasriel: Most people are not aware of actions the Fed took during the great depression. Bernanke claims that the Fed did not act strong enough during the Great Depression. This is simply not true. The Fed slashed interest rates and injected huge sums of base money but it did no good. More recently, Japan did the same thing. It also did no good. If default rates get high enough, banks will simply be unwilling to lend which will severely limit money and credit creation.

    Mish: How does inflation start and end?

    Kasriel: Inflation starts with expansion of money and credit. Inflation ends when the central bank is no longer able or willing to extend credit and/or when consumers and businesses are no longer willing to borrow because further expansion and /or speculation no longer makes any economic sense.

    Mish: So when does it all end?

    Kasriel: That is extremely difficult to project. If the current housing recession were to turn into a housing depression, leading to massive mortgage defaults, it could end. Alternatively, if there were a run on the dollar in the foreign exchange market, price inflation could spike up and the Fed would have no choice but to raise interest rates aggressively. Given the record leverage in the U.S. economy, the rise in interest rates would prompt large scale bankruptcies. These are the two “checkmate” scenarios that come to mind. (read the whole interview here)

    Summary: When banks don’t lend and consumers don’t borrow; the economy crashes. End of story. The whole system is predicated on the prudent use of credit. That system is now in terminal distress. Everyone to the bunkers.

    Perhaps the whole “inflation-deflation” debate is academic. The real issue is the length and severity of the impending recession. That’s what we really want to know. And how many people will needlessly suffer.

  70. irvinerealtor

    Breaking news. On counter-offer #4 of the sixth offer, we have an agreement to terms. Escrow to open tomorrow, set to close in 30 days or sooner.

    $5 goes to the closest guess in closing price.

    Chris and Chuck… honesty pays dividends:

    1.) Why would the statement that others have made offers rush a buyer?
    2.) If a property is in “backup offers” status it deters further offers from coming in. Why would that be an effective sales tactic?
    3.) Only work with someone you trust. I can’t control how others work, but I’d guess you’d never work with that agent who told you one thing and then did another. Sounds instead like a way to hamstring your career, to me.

  71. former_irvine_resident

    I have a former colleague who has taken a new role in the company that is requiring to relocate. He is selling his home in Anaheim and moving to Carlsbad. Needless to say I referred him to this blog among other resources so he could become better acquainted and equipped to deal with the current housing market.

    He only owes around 100k on his home that’s worth probably 500-600k and my advice to him was twofold:

    1 – Dump it. Get out as soon as possible. Price the home low and take what you can. Do not chase the market!

    2 – Rent. Don’t be prideful after years of home ownership. Sit tight with your cash and analyze the local market to determine the right time to jump back in.

    I sent him a few Redfin links to homes in the area he will be working that priced well below their original 2005 sale price. Hopefully this will illustrate how bubblicious the market has been and help him avoid making a major mistake.

  72. AZDavidPhx

    Yup.

    Not to spin 25w100k+’s argument (dumb as it is) into a straw man or anything, but I suppose you could make the same argument that Vegas Black Jack is a good investment if you know someone who made some money playing one time.

    He knew some guys who made some money during the boom. Most likely all the money they made is now evaporating in another distressed property somewhere.

    Those of us who made money and able to remain intellectually honest can see it for what it was: luck. We got lucky and would not consider buying real-estate any time soon.

  73. 25w100k+

    Ok, i’m going to suprise you and say maybe you arn’t giving yourself enough credit if you bought a place for 80k, timed the market, and made a ton of money?

    I’m not planning on buying anytime soon. I’ve never owned property and (fortunate or unfortunately) I wasn’t one of those guys who made tons of money off the boom.

    I just don’t think its as black and white as you are making it. There are currently people bargain hunting, finding great deals, and renting it for a profit.

    Could I do that? Hell no. I don’t know much about real estate at all. But that doesn’t mean its a ‘bad investment’ just because I don’t have the time/experience to be successful at it.

  74. CapitalismWorks

    Generally you would not list a property as being in escrow if that were not he case. Most realtors will avoid showing properties listed as in escrow to their clients because they see it as a waste of time.

  75. ipoplaya

    Congrats. I’ll take myself out of the running for the $5 since I already know what your sellers were looking for…

    The uber bears always seem to forget that places get bought and sold all the way down. If they didn’t, the market would just inflate exponentially with inventory and crash to bottom in a few short months.

  76. AZDavidPhx

    I’m spending very little.

    The savings account gets paid first every payday.

    I did see an advertisement on television the other night that promises cash for mailed in jewelry. Apparantly, you send them your gold earings so they can melt them down and they send you some cash.

    Maybe I should start investing in gold jewelry.

  77. irvinerealtor

    BTW… my fury lies with the Irvine Company for naming the development “West Irvine”? The only worse moniker I could imagine would be “Beachside Irvine” for our Easternmost village (except the budding Orchard Hills and Portola), maybe that’s coming soon?

  78. AZDavidPhx

    SOLD!

    To the chump with no shirt behind door number 1!

    Hurry up and starting throwing confetti and popping champagne bottles before he gets a chance to come to his senses!

    Lower the mirrors into position!

    Start the smoke machine!

  79. tenmagnet

    Ipop,

    How on earth do you know what the sellers are looking for?
    Don’t be pimpin’ your home, cheerleading those multiple offers.

  80. irvinerealtor

    The first is 33 Moonstone, which was 2 New Market’s initial best active comparable and toughest price competitor locally. Specs: (LP/SqFt $353.27 Orig Price $609,900 Prev Price $548,900 Cur List Price $529,900 DOM 249 Off Market 2/5/2008) The agent represents both buyer and seller. The reason you don’t know the address is the agent opted to hide this from advertising where possible in order to double-end it. If it closes, he finally did, at the seller’s cost.

    The second is 65 Ardmore, a little larger, and in good condition. I believe this one backs directly to Jamboree, though. Specs: (LP/SqFt $337.73 Org Price $619,900 Prev Price $549,900 Cur List Prc $529,900 CDOM 125 Off Market 2/18/2008)

  81. ipoplaya

    irvinerealtor lives down the street from me ten. He has represented me in two past purchase attempts… I think we set a record on one – six counter offers I believe and still no cigar. We talk houses at night when the dogs are out pooping on the HOA grass.

    He being the good realtor type he is always cleans up after his pooch… Whatever it takes to keep West Irvine’s values up!

    🙂

  82. ipoplaya

    Nah Troop. I’m a regular ole non-realtor. One can tell because I don’t walk around with that annoying thing hanging around my neck.

    irvinerealtor will be selling my house for me when we move-up though. He’s one of least BS-eey realtors I have come across in these parts…

  83. ipoplaya

    Just heard that all new (first year) teachers in IUSD are not being offered contracts for next year. Evidently they are going to re-assess the need for all new teachers and cut where they can…

    Wonder if this is the case in all districts or even statewide?

  84. skek

    My questions:

    What percentage of potential buyers/sellers are well informed about the market, such that they understand issues related to subprime, affordability, property values, etc.

    What percentage are clueless and just looking to buy at a monthly payment they can afford or sell for more than they bought it for?

    I know the IHB community reflects one extreme, but I’m curious what the masses think/know about the current real estate market.

  85. skek

    Kudos to irvinerealtor for coming in here and showing that a real estate professional can be professional, competent and not in complete denial about the market. Your efforts are appreciated and your contribution is valuable.

  86. Beentheredonethat

    This has been the most entertaining day on the housing blog in a while! Hats off irvinerealtor and ipoplaya, althought I think you are one in the same!

    My guess: 525K
    A big slide from what I sold the same plan for not too long ago!

  87. Condor

    As all good residents behind the Orange Curtain knows, we live in the OC just so we don’t have to think about L.A. If the LAUSD fell off the end of the earth tomorrow you would only get a smattering of polite applause among your OC neighbors…

  88. skek

    I agree, Condor. California missed an opportunity by not electing Tony Strickland State Controller last year. He was fond of pointing out that the LAUSD had enough non-teaching “administrators” that there weren’t enough seats in Dodger Stadium to hold them all, and vowed to go after them for their waste and abuse. Their administrative offices are like the Taj Mahal while inner city schools rot in disrepair. If every one of those incompetent bastards (again, not the teachers) lost their jobs, I’d say that was a net positive for California (and probably for the LAUSD students). Sadly, they will use the budget deficit to threaten us with deeper cuts in the classroom while they make sure to order new mahogany desks and leather chairs for their offices. Oh, did I mention that I don’t like public school administrators?

  89. Laura Louzader

    The only foreclosed owners I have sympathy for are those who bought within reason, on sensible 30-year mortgages, and lost their houses anyway because their areas were wiped out economically by job losses.

    I also sympathize with people who go through other personal disasters such as business failure and catastrophic illness.

    The denizens of Detroit and Cleveland are being foreclosed in record numbers because entire categories of jobs are disappearing quickly, and most likely forever. I feel for these people as they freeze up like deer in your headlamps, wondering should they flee for parts unknown in search of employment, leaving their family and community support systems, or should they stay and flounder about in search of whatever they can get.

    These people are being ignored by our pandering pols, who won’t even extend unemployment in the most devastated areas, but are willing to destroy the rest of us financially to finance a bailout for perfectly well-set folks who just had to “act rich”, and merrily HELOCed themselves to death for cars and clothes and trips and electronics, and often, second homes.

    And I’m absolutely sickened to see non-profits like ACORN, an organization that purports to advocate for housing for the poor and lower utility rates, instead partner with Countryside to help out middle-income borrowers who bought far over their heads in housing that goes way beyond being minimal shelter. ACORN is even accepting money from Chase Bank to hang fliers on the doors of defaulting borrowers who Chase can’t reach. One of the poor, hapless, exploited borrowers who is receiving assistance in working out her loan with Countryside is a Las Vegas casino analyst who bought a $392,000 house there, and who isn’t even delinquent on her $2400 a month payment yet. But she knows she will be when her payment adjusts to $4000 soon, so ACORN is helping work things out.

    Somehow, I cannot feel compassion for a woman living in a house I couldn’t afford, who can ante up $2400 a month payments, plus taxes and utilities. I guess that makes me heartless, but I know too many people who make less than $40K a year and who still manage to stay solvent and well-housed, who will have to help people like this woman through their taxes, while being robbed of the opportunity ever to own.

  90. irvinerealtor

    IR, your comments are much appreciated. Yes, those three exclamation points will have to stay now that they’ve been canonized here. I DID AVOID THE ALL CAPS for the most part, though, which has got to count for something.

    I’m not sure if the Realtors have cleaned up their spelling/grammar due to your criticism. More likely I would reason the decrease in total #s of sales coupled with decreased prices has driven the part-timers and ill-prepared out of the industry. A culling of the herd, so to speak, which is also expected. Forces me to get better or my boys don’t get shoes or food.

    I have a feeling more Realtors are among us, but are smart enough to not bring attention to that fact. You have a pretty savvy following. I’m naive enought to still think that accountability matters.

    Personally, I had been a little disappointed that none of my listings hadn’t been profiled previously. I’m as full of B.S. and hyperbole as the next guy. Come on! Now I feel a bit more like I’ve arrived.

    Regarding the property, you are exactly right. The courtyard is in the front of the home. No street frontage. Guest parking is on the street past the alley.

    I use a professional photographer who is worth every penny I pay for his service. This home was professionally staged, as well. I am admittedly not good at either of these functions but recognize the value to my sellers based on the initial “perception” of the buyers. That’s why I outsource.

    My focus is to get the home exposed to as many potential buyers as possible. That means hitting all marketing channels I know of, including open house, newspaper, direct mailers, MLS, Realtor.com, zillow.com, google base, trulia, even craigslist. I like Redfin’s site for its breadth of info, also. A very good choice of yours.

    Any additional suggestions you’d make? If its the truth, better to hear it now than later.

    Many thanks again. Now I’ll do my best to lay low, sip my koolaid, and peddle pergransteel to all who a) need help, b) want help, and c) are willing to let me help.

  91. former_irvine_resident

    That’s definitely an option to consider although with his income and the positive cash flow on the Anaheim property I doubt he’d need the HELOC.

  92. Stupid

    What ages were the baby boomers in the 80s? What do people typically do at that age?

    What ages are the baby boomer now? What do paople typically do at that age?

    In 10-20 years, what ages will the baby boomers be? What do people typically do at that age?

    Figure that out – pretty much explains the whole economic pattern.

  93. Chris_Silicon_Valley

    Hey thanks IR for reporting this.

    Frankly, I love Irvine. I had properties there before I moved to Sillycon Valley and sold those properties (luckily before the drop).

    I’d love to buy a SFH in Irvine when the price is right. For me, $250/sf would be about the bottom, IMHO.

  94. ex-Tangelo

    I was at a school meeting last night; one of the school district managers shocked me with a little anecdote… 1 out of 4 of the homeless students enrolled in the school system were in families that were former mortgage payers.

  95. ex-Tangelo

    I have a question for you (or your wife). The meeting I was at was entirely about our oversubscribed public school and California’s “open enrollment’. One of the parents was complaining about a teacher at the school who illegitimately enrolled his own children in the school. (It rates 10 out of 10 deciles in California API)

    I thought teachers should be able to enroll their children. If it isn’t a formal perk of attracting good teachers to a school, then it should be.

    Is this a California-wide policy? Or district-by-district?

  96. irvinerealtor

    Tony,

    Here’s that info for 18862 Saginaw: (List Date 1/31/2008 Date Added 2/3/2008 Tran Date 2/20/2008 DOM 2 LP/SqFt $449.55 Org Price $989,000 Prev Price $ Cur List Prc $989,000 CDOM 2 Off Market 2/5/2008)

    Looks like listing agent is representing both buyer and seller in the transaction. You can call her and try to get the answer.

  97. TurtleRidgeRenter

    We are right on the 73. If you are outside, it’s noisy from 6am-10am, moderate during the day and evening. By 11pm, it’s very quiet. Since it’s a toll road, there are rarely any trucks.

    Indoors, you don’t hear anything from the toll road.

    We lived a block away from Jamboree and PCH in Newport Beach for 9 years, THAT was noisy. Plus the jets taking off from John Wayne all day! And the geezers yelling swear words when they missed a shot (which was always) on the 16th fairway of the Newport Beach CC. And the golfballs breaking windows. Those guys sure did hook them. I will NEVER live on a golf course AGAIN.

  98. tm

    I would much rather use Chris Merritt for a sale/purchase in West Irvine. He’s a stand-up guy, honest, and knowledgeable. He also doesn’t prostitute himself on a blog.

  99. irvinerealtor

    Agreed. Chris is an outstanding broker and I have a great deal of respect for his work. He’d be an excellent choice to sell your home on Deermont when it’s time, TM.

  100. Everett

    POITG,

    I’m not especially compassionate, I can merely empathize with the foreclosed-upon parties. I think you and I probably share a disdain for folks who bought houses on 100% credit with the plan of flipping and profiting. The problem is identifying who did that and who is a relative innocent suffering from the vicissitudes of having to sell a house in a tumbling housing market.

    Cheers!
    Everett

  101. Everett

    AZDP,

    Congratulations on buying what is no doubt a very nice townhouse in Phoenix. I have to say, though, that I don’t understand your outrage. Are you outraged at people who take on mortgages to buy a house, or are you outraged at people who buy houses at a price that exceeds the “value” of the land and the structure? Moreover, what is a “dumbass amount” for a house, and is it a local phenomenon? While it may seem obvious to you in Phoenix that $300,000 for a townhouse is too much, you’d be hard-pressed to find a townhouse within 15 miles of Washington, DC, (my home) for that price. Here, at least, $300K would be a bargain for anything bigger than a one-room condo, especially if one wanted to live near their job (a reasonable desire). While I am also disturbed by the prospect of people living grossly outside their means (taking on a mortgage that constitutes…say…45% of their monthly income), I think there are definitely places in the United States where the price to income ratio is perenially high (i.e. New York, DC, San Francisco) and it’s unreasonable to expect the bottom 50-60% of the wage earners to forego home ownership.

    Cheers!
    Everett

  102. k.o.

    I’ve been reading this blog pretty much since the beginning, and I have noticed a bit more ‘attitude’ from IR. I took his comment as a swipe against these schools. Honestly, I get kind of sick of the hero worship that has been seen here lately. I appreciate this blog, but I assume he puts on his pants on one leg at a time just like all of us.

  103. ipoplaya

    So what’s the deal tm? You scaring off people from that Plan 3 REO @ $580K?!

    I think the would-be buyers must be figuring out that the intersection of Sorenson and Deermont is the part bad of Wisteria. That’s the Wisteria Hood…

    🙂

  104. tm

    That REO is a decent deal in today’s world, if only the bank would be willing to play well with others!

    The Sorenson and Deermont area is not bad at all. It’s better than living on an alley.

    Back to my original comments. I would choose Chris Merritt anytime for the above listed reasons, and I find it interesting that a local realtor outs himself on a public blog, especially IHB. But I understand that you two are friends and I’ll take that into consideration.

    See ya.

  105. ipoplaya

    Aw tm, I like Chris too, he’s a good guy and a decent realtor. Frank moves houses pretty nicely as well… I suspect you’d get about the same performance out of any of them.

    $580K is probably a little over-priced for the location and condition of that REO. Whatever lender that owns that hasn’t been very smart. They passed on offers above $600K previously and still the place sits unsold.

    I think Sorenson/Deermont is only location in our development I know of where residents, of different homes, actually got into a public fist fight. A pretty rare sight in suburban Irvine… IPD used to make a regular practice of stopping by that area. The dogs that ran free, killed the poor little pooch by the park, and made the papers came from that corner too I think… Seems like it has improved recently though.

  106. tony

    Thanks for the info.

    That’s a clear case where it’s not in the buyer’s interest to use the seller’s realtor.

    That’s an interesting house because they agent told me that it was 2200 sq feet but since I have that model (or used to until I blew it out and rebuilt ) I know that house can be no more than 2000 sq feet with their additions. Per my calculations that home is no more than 1970 sq feet… (1786 base + 96 kitchen + 88 back bedrooms = 1970 total sq feet )which means that the price is off by almost $90K!!!

    I wonder what will happen when they come to measure the house and realize they got ripped off….

    Also, the work was nice but reduced the home to one big room ( not really a Great room) that has the kitchen/den/dining room and a smallish living room. The bedrooms are tight and then you got a white elephant home next door (on the south side ) with high windows that look into the atrium and kitchen.

    I’ll ask Duffie. I’ve known him for over 20 years. He might know the details.

  107. roundcorners

    CHRIS & FRANK in West Irvine is a scam! You can see their Open House signs everywhere, pointing to nothing! They contradict their directions and get people lost. We imagine they just want lost people to call their phone numbers! I got several complaints from a legit Open House, that we went to after New Market

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